REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement"), dated as of January 21,
2004, is made and entered into by and between Decorize, Inc., a Delaware
corporation (the "Company") and NestUSA, Inc., a Delaware corporation (the
"Holder").
WITNESSETH:
WHEREAS, the Company has entered into that certain Stock Exchange Agreement
dated as of even date herewith (the "Purchase Agreement"), whereby the Company
will sell and Holder will buy certain of the Company's securities on the terms
and subject to the restrictions contained in the Purchase Agreement; and
WHEREAS, in consideration of the purchase by Holder of the Company's
securities pursuant to the Purchase Agreement, the Company has agreed to xxxxx
Xxxxxx the registration rights set forth in this Agreement;
NOW, THEREFORE, in consideration of the representations, covenants and
agreements contained herein, and certain other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
DEFINITIONS
The terms defined in this Article I shall have for all purposes of this
Agreement the respective meanings set forth below:
"Board" shall mean the Board of Directors of the Company.
"Common Stock" shall mean the Common Stock, $.001 par value, of the
Company, and any other class of capital stock of the Company that is duly
authorized and issued from time to time that does not have preferential rights
as to dividends or distributions of the Company's assets over any other class of
capital stock of the Company, including any shares issued in exchange for shares
of Common Stock upon any recapitalization by the Company.
"Exchange Act" shall mean the Securities and Exchange Act of 1934, as it
may be amended from time to time.
"Misstatement" shall mean an untrue statement of a material fact or an
omission to state a material fact required to be stated in a Registration
Statement or Prospectus or necessary to make the statements in a Registration
Statement or Prospectus not misleading.
"Person" shall mean a natural person, partnership, corporation, business
trust, association, joint venture or other entity or a government or agency or
political subdivision thereof.
"Prospectus" shall mean the prospectus included in any Registration
Statement, as supplemented by any and all prospectus supplements and as amended
by any and all post-effective amendments and including all material incorporated
by reference in such prospectus.
"Purchase Agreement" shall mean the Securities Purchase Agreement, dated as
of even date herewith, to which the Company and the Holder are parties.
"Registrable Security" shall mean (a) an outstanding share of Common Stock
issued by the Company to the Holder pursuant to the Purchase Agreement,
including any shares of Common Stock issued upon the conversion of the New Note
(as defined in the Purchase Agreement), or upon the exercise of the Warrants
sold to Holder thereunder, and (b) any security issued or issuable with respect
to such Common Stock by way of a stock dividend or stock split or in connection
with a combination of shares, recapitalization, merger, consolidation or
reorganization; provided, that, any such share or security shall be deemed to be
Registrable Security only if and so long as it is a Transfer Restricted
Security.
"Registration" shall mean a Demand Registration described in Section 2(a)
and a Piggyback Registration described in Section 2(b) hereof.
"Registration Expenses" shall mean the out-of-pocket expenses of a
Registration, including without limitation the following:
(1) all registration and filing fees (including fees with respect to
filings required to be made with the National Association of Securities
Dealers, Inc.) and any securities exchange on which the Common Stock is
then listed;
(2) fees and expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of counsel for the
underwriters in connection with blue sky qualifications of the Registrable
Securities);
(3) printing, messenger, telephone and delivery expenses;
(4) reasonable fees and disbursements of counsel for the Company; and
(5) reasonable fees and disbursements of all independent certified
public accountants of the Company incurred specifically in connection with
such Registration.
"Registration Statement" shall mean any registration statement which covers
Registrable Securities pursuant to the provisions of this Agreement, including
the Prospectus included in such registration statement, amendments (including
post-effective amendments) and supplements to such registration statement, and
all exhibits to and all material incorporated by reference in such registration
statement.
"SEC" shall mean the Securities and Exchange Commission.
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"Securities Act" shall mean the Securities Act of 1933, as amended from
time to time.
"Transfer Restricted Security" shall mean an issued and outstanding
security that has not been sold to or through a broker, dealer or underwriter in
a public distribution or other public securities transaction or sold in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act under Rule 144(k) promulgated thereunder (or any successor
rule other than Rule 144A). A security shall cease being a Transfer Restricted
Security if (i) all stop transfer instructions or notations and restrictive
legends with respect to such security are eligible to be removed, and (ii) the
Holder has received an opinion of counsel to the Company, to the effect that
such shares in holder's hands are freely transferable in any public or private
transaction without registration under the Securities Act (or holder has waived
receipt of such opinion).
"Underwritten Registration" or "Underwritten Offering" shall mean a
Registration in which securities of the Company are sold to an underwriter for
distribution to the public.
ARTICLE II
REGISTRATIONS
2.01 Demand Registration. Subject to the restrictions set forth below, on
or before February 20, 2004, the Company shall file a Registration Statement
with the Securities and Exchange Commission for purposes of registering the
resale of the Registrable Securities owned by the Holder (or its successors and
permitted assigns) and shall take such commercially reasonable actions in order
to effect as soon thereafter as practicable the Registration under the
Securities Act of all such Registrable Securities.
2.02 Piggyback Registration. Each time the Company decides to file a
Registration Statement under the Securities Act with respect to its Common Stock
(other than on Forms S-4 or S-8 or any successor form for the registration of
securities issued or to be issued in connection with a merger or acquisition or
employee benefit plan), including any Registration Statement filed on behalf of
stockholders of the Company exercising registration rights granted by the
Company with respect to such shares, the Company shall give written notice
thereof to Holder, and the Company shall include in such Registration Statement
such shares of Registrable Securities for which it has received written requests
to register such shares within thirty (30) days after such written notice has
been given; provided, that the Company shall not be required to do so if there
is an effective Registration Statement with respect to the Registrable
Securities owned by Holder, as contemplated in Section 2.01. If in the good
faith judgment of the managing underwriter in any Underwritten Offering, the
inclusion of all of the shares of Registrable Securities and any other Common
Stock requested to be registered by third parties holding similar registration
rights would interfere with the successful marketing of a smaller number of such
shares, then the number of shares of Registrable Securities and other Common
Stock to be included in the offering (except for shares to be issued by the
Company in an offering initiated by the Company) shall be reduced as provided
herein. The Company shall advise all holders of securities requesting
registration of the underwriters' decision, and the number of shares of
securities that are entitled to be included in the Underwritten Registration
shall be allocated first to the Company for securities being sold for its own
account and thereafter
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as set forth in Section 2.03 below. If any person does not agree to the terms of
any such underwriting, he shall be excluded therefrom by written notice from the
Company or the underwriter. Any Registrable Securities or other securities
excluded or withdrawn from such underwriting shall be withdrawn from such
registration. If shares are so withdrawn from the registration or if the number
of shares of Registrable Securities to be included in such registration was
previously reduced as a result of marketing factors, the Company shall then
offer to all persons who have retained the right to include securities in the
registration the right to include additional securities in the registration in
an aggregate amount equal to the number of shares so withdrawn, with such shares
to be allocated among the persons requesting additional inclusion in accordance
with Section 2.03 below.
2.03 Registration Cutback. In any circumstance in which all of the
Registrable Securities and other shares of Common Stock of the Company
(including shares of Common Stock issued or issuable upon conversion of any
currently unissued securities of the Company) with registration rights (the
"Other Shares") requested to be included in a registration on behalf of Holder
or other selling stockholders cannot be so included as a result of limitations
of the aggregate number of shares of Registrable Securities and Other Shares
that may be so included, the number of shares of Registrable Securities and
Other Shares that may be so included shall be allocated among each of the Holder
and other selling stockholders requesting inclusion of shares pro rata on the
basis of the number of shares Registrable Securities and Other Shares that would
be held by each of the Holder and other selling stockholders, assuming
conversion. If Holder or any other selling stockholders does not request
inclusion of the maximum number of shares of Registrable Securities and Other
Shares allocated to him or it pursuant to the above-described procedure, the
remaining portion of such stockholder's allocation shall be reallocated among
those other selling stockholders whose allocations did not satisfy their
requests pro rata on the basis of the number of Registrable Securities and Other
Shares which would be held by the Holder and other selling stockholders,
assuming conversion, and this procedure shall be repeated until all of the
shares of Registrable Securities and Other Shares which may be included in the
registration on behalf of Holder and other selling stockholders have been so
allocated.
ARTICLE III
COMPANY PROCEDURES
3.01 General Procedures. If and whenever the Company is required to
register Registrable Securities, the Company will use its best efforts to effect
such registration to permit the sale of such Registrable Securities in
accordance with the intended plan of distribution thereof, and pursuant thereto
the Company will as expeditiously as possible:
(a) prepare and file with the SEC as soon as practicable a
Registration Statement with respect to such Registrable Securities and use
its reasonable best efforts to cause such Registration Statement to become
effective and remain effective until the Registrable Securities covered by
such Registration Statement have been sold;
(b) prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement, and such supplements to the
Prospectus, as may be requested by Holder or any underwriter of Registrable
Securities or as may be
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required by the rules, regulations or instructions applicable to the
registration form used by the Company or by the Securities Act or rules and
regulations thereunder to keep the Registration Statement effective until
all Registrable Securities covered by such Registration Statement are sold
in accordance with the intended plan of distribution set forth in such
Registration Statement or supplement to the Prospectus;
(c) deliver to Holder and the underwriters, if any, without charge, as
many copies of each Prospectus (and each preliminary prospectus) as such
Persons may reasonably request and a reasonable number of copies of the
then-effective Registration Statement and any post-effective amendments
thereto and any supplements to the Prospectus, including financial
statements and schedules, all documents incorporated therein by reference
and all exhibits (including those incorporated by reference). The Company
hereby consents to the use of each such Prospectus (or preliminary
prospectus) by the Holder and the underwriters, if any, in connection with
the offering and sale of the Registrable Securities covered by such
Prospectus (or preliminary prospectus);
(d) prior to any public offering of Registrable Securities, register
or qualify or cooperate with Holder, the underwriters, if any, and their
respective counsel in connection with the registration or qualification of
such Registrable Securities for offer and sale under the securities or blue
sky laws of such jurisdictions as Holder or such underwriters may designate
in writing and do anything else necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by
the Registration Statement; provided, that the Company shall not be
required to qualify generally to do business in any jurisdiction where it
is not then so qualified or to take any action which would subject it to
general service of process in any such jurisdiction where it is not then so
subject;
(e) cause all such Registrable Securities to be listed on each
securities exchange or automated quotation system on which similar
securities issued by the Company are then listed;
(f) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such Registration
Statement;
(g) advise each seller of such Registrable Securities, promptly after
it shall receive notice or obtain knowledge thereof, of the issuance of any
stop order by the SEC suspending the effectiveness of such Registration
Statement or the initiation or threatening of any proceeding for such
purpose and promptly use its reasonable best efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such stop order
should be issued;
(h) at least three days prior to the filing of any Registration
Statement or prospectus or any amendment or supplement to such Registration
Statement or prospectus or any document that is to be incorporated by
reference in such Registration Statement or prospectus, furnish a copy
thereof to each seller of such Registrable Securities or their counsel;
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(i) notify Holder at any time when a prospectus relating to such
Registration Statement is required to be delivered under the Securities
Act, of the happening of any event as a result of which the prospectus
included in such Registration Statement, as then in effect, includes a
Misstatement, and then to correct such Misstatement as set forth in Section
3.05; and
(j) permit a representative of Holder, the underwriters, if any, and
any attorney or accountant retained by Holder or underwriter to
participate, at each such Person's own expense, in the preparation of the
Registration Statement, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such
representative, underwriter, attorney or accountant in connection with the
Registration; provided, however, that such representatives, underwriters,
attorneys or accountants enter into a confidentiality agreement, in form
and substance reasonably satisfactory to the Company, prior to the release
or disclosure of any such information.
3.02 Registration Expenses. The Registration Expenses of all Registrations
shall be borne by the Company. It is acknowledged by Holder that Holder will
bear all incremental selling expenses relating to the sale of the Registrable
Securities, such as underwriters' commissions and discounts, brokerage fees,
underwriter marketing costs and all fees and expenses of any legal counsel
representing Holder.
3.03 Requirements for Participation in Underwritten Offerings. No person
may participate in any Underwritten Offering for equity securities of the
Company pursuant to a Registration initiated by the Company hereunder unless
such Person (a) agrees to sell such Person's securities on the basis provided in
any underwriting arrangements approved by the Company and (b) completes and
executes all questionnaires, powers of attorney, indemnities, lock-up
agreements, underwriting agreements and other documents required under the terms
of such underwriting arrangements.
3.04 Suspension of Sales. Upon receipt of written notice from the Company
that a Registration Statement or Prospectus contains a Misstatement, Holder
shall forthwith discontinue disposition of Registrable Securities until it has
received copies of a supplemented or amended Prospectus correcting the
Misstatement (it being understood that the Company hereby covenants to prepare
and file such supplement or amendment as soon as practicable after the time of
such notice), or until it is advised in writing by the Company that the use of
the Prospectus may be resumed.
3.05 Reporting Obligations. As long as Holder shall own Registrable
Securities, the Company, at all times while it shall be reporting under the
Exchange Act, covenants to file timely (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed by
the Company after the date hereof pursuant to Section 13(a) or 15(d) of the
Exchange Act and to promptly furnish Holder with true and complete copies of all
such filings. The Company further covenants that it will take such further
action as Holder may reasonably request, all to the extent required from time to
time to enable Holder to sell shares of
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Common Stock held by Holder without registration under the Securities Act within
the limitation of the exemptions provided by Rule 144 promulgated under the
Securities Act ("Rule 144"), including providing any legal opinions. Upon the
request of Holder, the Company shall deliver to Holder a written certification
of a duly authorized officer as to whether it has complied with such
requirements.
3.06 Indemnification.
(a) The Company agrees to indemnify, to the extent permitted by law,
the Holder of Registrable Securities, its officers and directors and each
Person who controls Holder (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities and expenses (including
attorneys' fees) caused by any untrue or alleged untrue statement of
material fact contained in any Registration Statement, prospectus or
preliminary prospectus or any amendment thereof or supplement thereto or
any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as the same are caused by or contained in any information furnished
in writing to the Company by holder expressly for use therein or by holder'
failure to deliver a copy of the Registration Statement or prospectus or
any amendments or supplements thereto after the Company has furnished
holder with a sufficient number of copies of the same. The Company will
indemnify the underwriters, their officers and directors and each Person
who controls such underwriters (within the meaning of the Securities Act)
to the same extent as provided above with respect to the indemnification of
the Holder.
(b) In connection with any Registration Statement in which Holder is
participating, Holder will furnish to the Company in writing such
information and affidavits as the Company reasonably requests for use in
connection with any such Registration Statement or prospectus and, to the
extent permitted by law, will indemnify the Company, its directors and
officers and agents and each Person who controls the Company (within the
meaning of the Securities Act) against any losses, claims, damages,
liabilities and expenses (including without limitation reasonable
attorneys' fees) resulting from any untrue statement of material fact
contained in the Registration Statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission
of a material fact required to be stated therein or necessary to make the
statements therein not misleading, but only to the extent that such untrue
statement or omission is contained in any information or affidavit so
furnished in writing by holder expressly for use therein; provided, that
the obligation to indemnify will be several, not joint and several, among
such holders of Registrable Securities, and the liability of each such
holder of Registrable Securities will be in proportion to and limited to
the gross amount received by such holder from the sale of Registrable
Securities pursuant to such Registration Statement. The Holder will
indemnify the underwriters, their officers, directors and each Person who
controls such underwriters (within the meaning of the Securities Act) to
the same extent as provided above with respect to indemnification of the
Company.
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(c) Any person entitled to indemnification herein will (i) give prompt
written notice to the indemnifying party of any claim with respect to which
it seeks indemnification and (ii) unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is
assumed, the indemnifying party will not be subject to any liability for
any settlement made by the indemnified party without its consent (but such
consent will not be unreasonably withheld). An indemnifying party who is
not entitled to, or elects not to, assume the defense of a claim will not
be obligated to pay the fees and expenses of more than one counsel for all
parties indemnified by such indemnifying party with respect to such claim,
unless in the reasonable judgment of any indemnified party a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim.
(d) The indemnification provided for under this Agreement will remain
in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling
person of such indemnified party and will survive the transfer of
securities. The Company and Holder also agree to make such provisions as
are reasonably requested by any indemnified party for contribution to such
party in the event the Company's or Holder's indemnification is unavailable
for any reason.
(e) Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting agreement
entered into in connection with an Underwritten Offering are in conflict
with the foregoing provisions, the provisions of the underwriting agreement
shall control.
3.07 Restrictions on Public Sales. In consideration of the agreements
contemplated herein, Holder and the Company further agree to the following
restrictions:
(a) Holder, if the Company or the managing underwriters so request in
connection with any underwritten registration of the Company' securities,
will not, without the prior written consent of the Company or such
underwriters, effect any sale of the Registrable Securities to the public
pursuant to a public offering or otherwise or other distribution of any
equity securities of the Company, including any sale pursuant to Rule 144
(each of the foregoing, a "Prohibited Sale"), during the seven (7) days
prior to, and during the one hundred eighty (180) day period commencing on,
the effective date of such underwritten registration, except in connection
with such underwritten registration; provided, that the foregoing shall not
apply to restrict the sale by any Stockholders who together with any of its
Affiliates, as such term is defined in the Securities Act, holds less than
two percent (2%) of the Common Stock on a fully diluted basis..
(b) The Company agrees not to effect any Prohibited Sale or other
distribution of its equity securities, or any securities convertible into
or exchangeable or exercisable for such equity securities, during the
period commencing on the seventh day prior to, and
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ending on the one hundred eightieth (180th) day following, the effective
date of any underwritten Demand or Piggyback Registration, except in
connection with any such underwritten registration and except for any
offering pursuant to an employee benefit plan and registered on Form S-8
(or any successor form).
ARTICLE IV
MISCELLANEyOUS
4.01 Notices. All notices and other communications provided for or
permitted hereunder shall be made in accordance with the notice provisions
contained in Section 8.03 of the Purchase Agreement.
4.02 Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of the Company. No rights under
this Agreement may be assigned by Holder without the prior written consent of
the Company.
4.03 Counterparts. This Agreement may be executed in multiple counterparts
(including facsimile counterparts), each of which shall be deemed an original,
and all of which together shall constitute the same instrument, but only one of
which need be produced.
4.04 GOVERNING LAW; VENUE. NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT
MAY BE EXECUTED BY ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF
DELAWARE AS APPLIED TO AGREEMENTS AMONG DELAWARE RESIDENTS ENTERED INTO AND TO
BE PERFORMED ENTIRELY WITHIN DELAWARE, WITHOUT REGARD TO THE CONFLICT OF LAW
PROVISIONS OF SUCH JURISDICTION. VENUE FOR ANY ACTION TO ENFORCE, INTERPRET, OR
RESOLVE ANY DISPUTE WITH RESPECT TO ANY PROVISION OF THIS AGREEMENT SHALL BE
EXCLUSIVELY IN XXXXXX COUNTY, MISSOURI, AND ALL PARTIES HERETO AGREE THAT ANY
LITIGATION DIRECTLY OR INDIRECTLY RELATING TO THIS AGREEMENT MUST BE BROUGHT
BEFORE AND DETERMINED BY A COURT OF COMPETENT JURISDICTION WITHIN SUCH COUNTY
AND STATE. EACH OF THE PARTIES FURTHER ACKNOWLEDGE THAT SUCH VENUE IS
APPROPRIATE AND AGREE NOT TO RAISE ANY ARGUMENT THAT SUCH VENUE IS IN ANY WAY
UNDULY INCONVENIENT FOR ANY OF THEM, WITH THEIR EXECUTION HEREOF BEING EVIDENCE
OF THEIR AGREEMENT TO SUBMIT TO THE JURISDICTION OF SUCH COURTS.
4.05 Amendments and Modifications. Upon the written consent of Holder,
compliance with any of the provisions, covenants and conditions set forth in
this Agreement may be waived, or any of such provisions, covenants or conditions
may be modified. No course of dealing between Holder or the Company and any
other party hereto or, amended or deleted any failure or delay on the part of
Holder or the Company in exercising any rights or remedies under this Agreement
shall operate as a waiver of any rights or remedies of Holder or the Company. No
single or partial exercise of any rights or remedies under this Agreement by a
party shall operate
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as a waiver or preclude the exercise of any other rights or remedies hereunder
or thereunder by such party.
[signature page to follow]
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the date first written above.
COMPANY:
DECORIZE, INC.,
a Delaware corporation
By:
-------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Executive Vice President and CFO
HOLDER:
NESTUSA, INC.
a Delaware corporation
By:
------------------------------------
Name:
Title:
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